URGENT: Managing Innovation Assignment No.2
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ch02_the_role_of_the_state.pptBUTM 404 – Innovation Management
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Innovation Management
Module 2a
Prepared by
Milan Frankl
for
University Canada West
CHAPTER 2
The context of innovation and the role of the state
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This chapter aims to demonstrate that the process of innovation has a much wider context than is readily acknowledged.
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CHAPTER 2
The context of innovation and the role of the state
- Learning objectives
Understand the wider context of innovation and the key influences
Recognize that innovation cannot be separated from its local and national context and from political and social processes
Understand that the role of national states considerably influences innovation
Identify the structures and activities that the state uses to facilitate innovation
BUTM 404 – Innovation Management
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Learning objectives
Understand the wider context of innovation and the key influences
Recognize that innovation cannot be separated from its local and national context and from political and social processes
Understand that the role of national states considerably influences innovation
Identify the structures and activities that the state uses to facilitate innovation
Identify the factors that have contributed to the lack of innovation in the ‘lateindustrialising’ state of Turkey
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How national states can facilitate innovation
- Fi.g 2.2 - Role of the state in innovation
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Indeed, innovation cannot be separated from political and social processes. The nationality of innovation has been a widely accepted characteristic of the capitalist development process.
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The role of the state:
Kaizen
- Check your toolbox: Kaizen
- The foundation of the Kaizen method consists of 5 founding elements:
teamwork,
personal discipline,
improved morale,
quality circles, and
suggestions for improvement.
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The Kaizen method of continuous incremental improvements is an originally Japanese management concept for incremental (gradual, continuous) change (improvement). K. is actually a way of life philosophy, assuming that every aspect of our life deserves to be constantly improved.
The Kaizen philosophy lies behind many Japanese management concepts such as Total Quality Control, Quality Control circles, small group activities, labor relations.
Key elements of Kaizen are quality, effort, involvement of all employees, willingness to change, and communication.
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The role of the state:
Keiretsu
- Check your Toolbox: Keiretsu
("ei" pronounced as in "weigh")
- A keiretsu (keiretsu lit. system or series) is a set of companies with interlocking business relationships and shareholdings. It is a type of business group.
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Keiretsu in Japan
The prototypical keiretsu are those which appeared in Japan during the "economic miracle" following World War II. Before Japan's surrender, Japanese industry was controlled by large conglomerates called zaibatsu.
The Allies dismantled the zaibatsu in the late 1940s, but the companies formed from the dismantling of the zaibatsu re-interlinked through share purchases to form horizontally-integrated alliances across many industries.
Where possible, keiretsu companies would also supply one another, making the alliances vertically integrated to some extent.
The major keiretsu were each centered around one bank, which lent money to the keiretsu's member companies and held equity positions in the companies. Each central bank had great control over the companies in the keiretsu and acted as a monitoring entity and as an emergency bail-out entity. One effect of this structure was to minimize the presence of hostile takeovers in Japan, because no entities could challenge the power of the banks.
There are two types of keiretsu: vertical and horizontal. Vertical keiretsu illustrates the organization and relationships within a company, while a horizontal keiretsu shows relationships between entities, normally centered around a bank and trading company.
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Fostering Global Innovation.
As globalization and the Internet reshape the way companies do business, the ability to offshore positions and company locations has accelerated, hastened by cheaper labor costs abroad in such places as China, Brazil and India.
Innovation in information and communication technologies, while creating opportunity, has also dislocated workers.
UPS CEO and chairman Mike Eskew addressed the issue, noting,
“Globalization is here, and now the question is how do we harness it and make it fair, and create winners with innovation. The flow of info, the flow of goods, and now it’s the flow of funds to pay for it—when those were distinct transactions, it was difficult for them to be done too far from the company. Now these things are really not separate anymore. There is no longer a need for face-to-face business. Instead of bringing a person to the work, it’s often cheapest for the work to be done elsewhere.”
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The USA, in particular, is frequently cited as a good example of a nation where the necessary conditions for innovation to flourish are in place.
UPS CEO and chairman Mike Eskew addressed the issue, noting, “Globalization is here, and now the question is how do we harness it and make it fair, and create winners with innovation. The flow of info, the flow of goods, and now it’s the flow of funds to pay for it—when those were distinct transactions, it was difficult for them to be done too far from the company. Now these things are really not separate anymore. There is no longer a need for face-to-face business. Instead of bringing a person to the work, it’s often cheapest for the work to be done elsewhere.”
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Fostering innovation in the “late-industrializing” countries
- Digital Access Index
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Digital Access Index (DAI) In 2003, the Market, Economics and Finance Unit launched the Digital Access Index (DAI), a new index, which measures the overall ability of individuals in a country to access and use new ICTs (Information and Communication Technology).
The DAI is built around four fundamental vectors that impact a country's ability to access ICTs: infrastructure, affordability, knowledge and quality and actual usage of ICTs.
The DAI has been calculated for 181 economies where European countries were among the highest ranked.
The DAI allows countries to see how they compare to peers and their relative strengths and weaknesses. The DAI also provides a transparent and globally measurable way of tracking progress towards improving access to ICTs.
The first global index to rank (ICT) access has turned up some surprises. Slovenia ties France; and the Republic of Korea, usually not among the top ten in international ICT rankings, comes in fourth.
Apart from Canada, ranked 10th, the top ten economies are exclusively Asian and European. The Digital Access Index (DAI) distinguishes itself from other indices by including a number of new variables, such as education and affordability. It also covers a total of 178 economies, which makes it the first truly global ICT ranking.
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